According to the GHM Theory,the Choice Between an In-House Sales

question 25

Multiple Choice

According to the GHM Theory,the choice between an in-house sales force versus independent agents should turn on the relative importance of investments in developing persistent clients by the agent versus list-building activities by the insurance firm.What would GHM thus predict about the sales of whole life versus term life insurance?

• A)Both would be sold by the insurance company's in-house sales force
• B)Whole life would be sold by the insurance company's in-house sales force;term by an independent agent
• C)Whole life would be sold by an independent agent;term by the insurance company's in-house sales force
• D)Both would be sold by an independent agent
• E)An insurance company would try to "buy" the business (whole and term life insurance)of its independent agents

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Definitions:

Circular-Flow Diagram

A visual model that illustrates the flow of goods and services and money between households and firms in an economy.

Household

An individual or group of people living together and making joint decisions regarding consumption and finances.

Circular-Flow Diagram

A visualization of the economy that shows how dollars flow through markets among households and firms, highlighting the interactions between product and resource markets.

Factor Market

A factor market is the marketplace where productive resources like labor, capital, and natural resources are bought and sold.